On the difficulty of being good

B. Ramalingam Raju has been much on the minds of the citizens of our Republic, whose birthday we celebrate tomorrow. It is thus a good time to reflect on Satyam’s moral significance for our post-liberalization era. Although the story is still unfolding, there are intimations of sadness and tragedy about a man who has committed the greatest fraud in Indian corporate history. The swindle was worth Rs. 7136 crores, and the deceit went on for seven years. As a result, the public—both Indian and foreign investors—have lost around Rs 23,000 crores in the value of their shares, and over 40,000 employees face an uncertain future.

Raju built through skill, talent and dedication a great company. Ten years ago, I looked him in the eye and I saw sincerity, competence, and great purpose. I saw ambition, not greed. Soon after that I ran into one of his customers in the U.S. and she spoke glowingly about Satyam’s dedication to quality, reliability, and integrity. There is no tribute greater than a satisfied, passionate customer, and it explained to my foggy mind, at least in part, why India had become the world’s second fastest growing economy.

Why should a person of such palpable achievement turn to crime? Was it just greed or was it because his stake in Satyam had dwindled to 8.6 %, and the company was in danger of slipping out of the family’s control? Raju had two sons and possibly a sense of filial duty drove him to create companies in real estate and infrastructure, two sectors of our economy that are only half liberalized, where politicians insist on bribes up-front for favours delivered. Since revenues from the new companies were far away, Raju dipped into Satyam to pay the politicians. It might have worked but no one counted on a downturn and a liquidity crisis. Desperately, he tried to restore the stolen assets back to Satyam by merging it with his son’s companies but that didn’t work.

When Raju crossed the line from his cheerful and familiar world of open and competitive capitalism into the dark nether regions of crony capitalism, he was no longer in control. He had walked from the transparent world of reformed India into the shadowy underworld of unreformed India, whose rules are set by crooked politicians. Why did he do it? Greed is too easy an answer. It might have been hubris, like Duryodhana’s in the Mahabharata, who thought he was master of the universe and could get away with anything. It is easy to believe your infallibility when everyone in Hyderabad tells you so.

The better comparison, I believe, is with the father. Raju was ruined by his Dhritarashtra-like weakness for his sons. We should nurture our children, but we don’t need to leave them a company each, certainly not by crossing the line of dharma. It takes moral courage to resist the sentiment of partiality to one’s family. This is why the Mahabharata challenges the old sva-dharma of family and caste, preferring instead the newer, universal sadharana-dharma, which teaches us to with behave impartially with everyone.

Satyam is a case of fraud and criminality. So, let us also stop wringing our hands, looking for regulatory answers. It is not a governance failure. Internal and external auditors, and independent directors are guilty only of negligence. This was such an ingenious crime that that no still understands it. Remember, there are crooks in every society, and they will get around the most fool-proof systems. So, don’t try to reform the system—it will only create more red tape and kill the animal spirits of capitalism. The important thing is to quickly get to the truth, and put the guilty behind bars. Ideally, make the crooks sing and book their political protectors as well. Don’t blame liberalization either--the answer is more reform, not less, in order to break the nexus between politicians and business in the unreformed sectors of our economy.

Raju’s story causes us discomfort because it challenges our unexamined conception of success. Surely, there is a better way to live, we ask. Yudhishthira also challenged the kshatriya concept of success in the Mahabharata. When he insisted on taking a stray dog into heaven, he performed an act of dharma, showing that goodness is one of the few things of genuine worth in this world that might take away some of the familiar pain of being alive and being human in these post-liberalization times.

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